What a sad story especially if Tim's post about negligent accounting is correct. I actually was thinking of buying some ENE on Monday just in case the liquidation possibility became a reality. Now the attorneys can finish off what's left of the company. :~((
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Enron Corp. Files for Bankruptcy
.c The Associated Press
NEW YORK (Dec. 2) - Beleaguered energy company Enron Corp. has filed for Chapter 11 bankruptcy protection, the company said, and filed a lawsuit against would-be suitor Dynegy Inc. for wrongful termination of its $8.4 billion proposed merger.
In a statement released Sunday, the company said it was suing Dynegy for wrongful termination of the merger and seeking at least $10 billion in damages.
Both lawsuits were filed U.S. Bankruptcy Court for the Southern District of New York in Manhattan.
In the statement, Houston-based Enron said it is in "active discussions'' with several financial institutions to secure credit for the continued operation of its wholesale energy trading business, as well additional funding to keep the rest of the company operating.
In the lawsuit filed against Dynegy, Enron claimed that the Houston-based company terminated the merger agreement "when it had no contractual right to do so.'' It also claimed that Dynegy has "no right'' to exercise an option to acquire Enron's northern natural gas pipeline because it "can only be triggered by a valid termination'' of the merger agreement.
Enron also said it would ask the court to consider several "first day motions'' to continue payments for its workers' payroll and health benefits, as well as keeping vendors paid.
On Friday, accounting firm Arthur Andersen LLP said that the Securities and Exchange Commission had issued it subpoenas related to its auditing of Enron's accounts, and that it had provided the information requested by the SEC, which has been investigating Enron.
Enron recently revealed that partnerships run by its executives had allowed the company to keep about $500 million in debt off its books and let the executives profit from the arrangements. The company ousted its chief financial officer, Andrew Fastow, in October, and recently restated its earnings back to 1997 - eliminating more than $580 million in reported income in that time span.
Andersen also said its own review would be expanded to include procedures at its Houston office, which did the Enron audits.
The filing had been expected by several analysts and stockholders, many of whom were stunned by the company's fall from grace.
Enron's loss of credibility in the market stemmed from revelations that its chief financial officer was running partnerships that allowed the company to keep half a billion dollars in debt off its books. In early November, Enron restated its earnings back to 1997, eliminating more than $580 million in reported income in that time span.
Dynegy swooped in to rescue its neighbor with an $8.4 billion buyout, but even top officials at the smaller rival were surprised when Enron later disclosed it had a $690 million debt within a week.
Amid negotiations to reduce the purchase price, the Dynegy-Enron deal fell apart after Enron's credit was reduced to junk status.
Congressional leaders are calling for hearings into the Enron fallout, the Securities and Exchange Commission is investigating, and both investors and employees have filed several lawsuits.
AP-NY-12-02-01 1641EST
Copyright 2001 The Associated Press. |
